I had never heard of an MBO Bonus until our CEO told me he was adding one to my compensation plan. As the VP of Sales at a venture-backed, B2B SaaS company, I welcomed adding every bonus possible to my comp plan. In this article, I'll answer the following questions:
MBO bonus stands for Management by Objectives bonus. It is a performance-based bonus awarded to employees who achieve predetermined goals that align with the organization's overall objectives. MBO bonuses are intended to motivate employees to perform at their best, resulting in increased productivity, engagement, and accountability. The bonus serves as a reward for meeting or exceeding expectations and encourages employees to continue striving for excellence in their work.
To calculate an MBO bonus:
The calculation process can vary depending on the MBO program in place, so clear communication and transparency are crucial.
Here are some best practices for establishing MBO bonuses for your team:
By following these best practices, I hope you can either better motivate your employees or better negotiate how your personal MBO bonus is structured.